There is a plan to deal with weak banks, SCB

This information was given by Permanent Deputy Prime Minister Pham Binh Minh when reporting on behalf of the Government on the results of socio-economic implementation in 2022 and the plan for 2023 at the Government's online conference with localities on January 3.

Deputy Prime Minister Pham Binh Minh reported on the Government's direction and administration; socio-economic situation and results in 2022, directions and tasks for socio-economic development in 2023, January 3.Photo: VGP

According to Deputy Prime Minister Pham Binh Minh, 2022 has resolved many outstanding issues over the past years. For example, the Prime Minister approved the project to restructure the system of credit institutions associated with bad debt settlement for 2021-2025, including completing the legal framework on currency, banking operations, restructuring and handling bad debt, improving credit quality... According to a report by the Ministry of Planning and Investment, by the end of October, the ratio of bad debt on the balance sheet was 1.92%, bad debt, debt sold to VAMC that has not been settled and potential bad debt compared to the total outstanding debt was 4.5%.

The Government also reported and proposed to the Politburo a mechanism to deal with weak banks and Saigon Bank (SCB); and to restructure the Vietnam Development Bank (VDB).

The 4 weak banks currently subject to restructuring include DongA Bank and 3 banks subject to compulsory purchase: Construction Bank (CB), Ocean Bank, and Global Petroleum Bank (GPBank).

As for Saigon Bank, since mid-October, the State Bank has placed this unit under special control. This is to stabilize operations and limit negative impacts on the bank and the credit institution system. SCB was originally merged by 3 banks: SCB, First (FCB) and Vietnam Tin Nghia (TNB). This bank has the largest total assets in the private banking group and is in the group of 5 credit institutions with the largest asset size in the market.

Following the direction of competent authorities on handling weak banks, the Government said that this year it will focus on implementation, aiming to ensure stable operations and support these banks to gradually recover.

In addition, the Government has submitted to competent authorities a plan to handle 8/12 projects that are behind schedule and losing money, such as Thai Binh 2 Thermal Power Plant, Long Phu Thermal Power Plant, Song Hau 1 Thermal Power Plant, Lot B - O Mon gas-electricity project cluster; urban railway projects in Hanoi and Ho Chi Minh City, and the plan to bankrupt SBIC.

The Government will also report and submit plans for handling projects and land in inspection and examination conclusions in a number of provinces and cities to the Politburo in 2022.

Looking back at 2022, the Government leader commented, the economy suffered double negative impacts. Inflationary pressure increased, prices of gasoline, oil, raw materials and materials fluctuated strongly. Large, traditional markets declined; production and business faced many difficulties... However, with a proactive, flexible management scenario and efforts to overcome difficulties, the economy recovered quickly.

This is reflected in the GDP growth target for the whole year reaching 8.02%, the highest increase in more than a decade. Inflation was controlled, the average consumer price index for the whole year increased by 3.15%.

Interest rates were adjusted appropriately, credit growth for the whole year reached nearly 12.9%. Budget revenue exceeded the estimate by more than 26%, up nearly 14% compared to 2021. Total import and export turnover of goods reached 732.5 billion USD; trade balance surplus for 7 consecutive years, reaching over 11 billion USD.

Total realized social investment capital reached over 3.2 million billion VND, up 11.2%, of which realized FDI capital was 22.4 billion USD, up 13.5%, the highest in the past 5 years.

In his opening speech, Prime Minister Pham Minh Chinh emphasized that the spirit of direction and management is to innovate the way of doing things, not to spread out, to determine the order of priorities, to focus on solving key and central issues, and to complete each task...

Prime Minister Pham Minh Chinh delivered the opening speech at the Government Conference with localities on January 3.Photo: VGP

However, the economy still has problems and difficulties."The above limitations and shortcomings have both objective and subjective causes, of which the subjective is the main one," the Government leader commented.

According to the report of the Ministry of Planning and Investment, of the 15 socio-economic development targets assigned by the National Assembly, 13 targets were exceeded. One target that was almost achieved was the proportion of manufacturing and processing industry in GDP reaching 25.03%. And one target that was not achieved was the labor productivity growth rate, at 4.8% (0.7% lower than the target).

Capital markets such as bonds, stocks, real estate... have potential risks, requiring review and improvement of the legal framework for sustainable and healthy development and to create trust with investors. Regulations on the development of individual bonds are slow to be completed, affecting the development of new capital mobilization channels for businesses, increasing pressure on the banking system.

The real estate market has shown signs of overheating in the first months of the year, forming a new price level, increasing pressure on the State and investors when it comes to compensation and site clearance...

A report from the Ministry of Planning and Investment shows that as of December 30, the volume of individual corporate bonds issued was about VND333,400 billion, with a tendency to decrease over the quarters.

Regarding the stock market, the VN-Index closed the session on December 30 at 1,007.09 points, down nearly 4% compared to the previous month and approximately 33% compared to the end of 2021. The stock market capitalization reached more than 5.2 million billion VND, equivalent to 55% of estimated GDP in 2022. The average trading value was 20,200 billion VND per session, down more than 24% compared to last year.

To prevent virtual land price fever in some localities and regions, the Prime Minister has established a Working Group to urge and guide the removal of difficulties in implementing real estate projects.

2023, the pivotal year for implementing the 5-year Socio-Economic Development Plan (2021-2025), Prime Minister Pham Minh Chinh emphasized the utmost effort and determination to implement with the motto "Solidarity, discipline; courage, flexibility; proactiveness, creativity; timeliness, efficiency".

He requested that ministries, branches and localities need to "turn danger into opportunity", effectively handling regular tasks, resolving long-standing issues, and promptly responding to newly arising issues... This is to create a fundamental, long-term foundation for sustainable development.

"The spirit of saying is doing, committing is implementing, being effective, products are quantified, weighed, measured, and counted," said the Prime Minister.

This year, the National Assembly assigned a growth target of 6.5% and inflation control of about 4%. To achieve this target, Minister of Planning and Investment Nguyen Chi Dung, when advising the Government, assessed that the money, credit, corporate bond, securities, real estate markets... need to be managed and regulated, not to lose system safety, ensuring the market develops safely, healthily and stably. Credit growth next year needs to be managed reasonably, meeting the demand for economic capital to contribute to controlling inflation, supporting economic growth...

In the context of the epidemic with potential risks and the emergence of many new strains, Mr. Dung said that the task of disease prevention, control and control "cannot be neglected".

At the same time, agencies, ministries and sectors need to step up the fight against corruption and negativity, administrative reform and improve the business environment. The economy needs to continue restructuring in conjunction with growth model innovation, in order to improve competitiveness, autonomy, adaptability and economic resilience...